Thursday, June 23, 2011

Europe's target: Qaddafi's Fuel Supply

TIGHTER European Union sanctions on Muammar Qadhafi’s regime have been agreed and will be sent to the European Council for formal approval on 8 June, Petroleum Economist has learnt. The measures will directly target trade in and out of the regime by banning vessels from landing at six ports.

It is understood that any vessel that breaks the embargo would afterwards be banned from landing in an EU port.

The news, which follows the defection of former oil chief Shokri Ghanem, will increase pressure on Qadhafi. It will also exacerbate fuel shortages in the west, where civilians are said to be queuing for up to five days for gasoline that sells for more than $5 a litre.

While the EU works to impose new sanctions, documents seen by Petroleum Economist also show continued efforts by General National Maritime Transport Company (GNMTC), the state-run shipping firm under control of Qadhafi’s son Hannibal, to secure new cargoes of fuel into western Libya.

Such imports have become difficult since Petroleum Economist revealed details of Turkish and Italian fuel exports destined for Libya, which prompted Nato to interdict one ship and monitor others.

The new EU measures are another effort to stop fuel supplies from reaching western Libya. It is understood that ports within rebel-held territories, such as Tobruk, will be excluded from the new sanctions.

Previous EU sanctions banned “the supply to Libya of arms, ammunition and related material”. The Council, which oversees the EU’s sanctions regime, also prohibited “trade with Libya in equipment which might be used for internal repression”.

Nato approach

However, legal experts said neither that embargo nor UN Security Council Resolution 1973 which mandated Nato’s action to defend civilians from attack, were sufficient to prevent trading fuel and oil with the regime.

Nato has taken a different approach, saying the regime is diverting civilian fuel for use by the army in its war against the country’s rebels. Following a Petroleum Economist report, it arrested the Jupiter on 19 May, preventing it from discharging 12,750 tonnes of gasoline.

Another vessel, the Cartagena, which sources said was carrying 37,500 tonnes of gasoline to Tripoli, remains offshore Malta. A well-placed source told Petroleum Economist that its bill of lading carried a destination of Tripoli, Lebanon, but that the true discharge point was Zawiyah, Libya.

Petroleum Economist has seen a document, including communication between the vessel’s captain and GNMTC seeking instruction for passage of the Cartagena to Libya, confirming both the Cartagena’s efforts to evade arrest by Nato and that its destination is Zawiyah.

Banning trade in and out of Libya’s ports would also prevent the lifting of up to 800,000 barrels of Amnah light crude oil the regime wants to export. The cargo is held in Ras Lanuf, a source told Petroleum Economist. The source said that the oil came from fields now under rebel control, which meant they may try to claim ownership of it.

GNMTC has instructed the Samraa al-Khaleej urgently to lift the oil, said the source. Ship tracking services confirmed that the vessel was moored and awaiting instruction offshore Malta on 2 June.

A western diplomatic source said the EU’s new sanctions would also prevent such a trade. Previously, Italy and France had remained reluctant to include GNMTC on the banned list.

Ghanem spurned

Last year a French shipyard signed a contract to build a vessel for GNMTC. Italy’s Sarrouch refinery is said to have been a source of some fuel destined for Qadhafi’s regime in recent weeks. Saras, the company operating the refinery, has refused repeated requests from Petroleum Economist for comment.

Meanwhile, Shokri Ghanem has confirmed his defection. He told a news conference in Rome on 1 June that he had left the regime because of the daily bloodshed and was supporting Libya’s youth, and their goal of creating a constitutional democracy in the country.

His appearance ended days of speculation about his intentions and location. Sources within a western government and in the Libyan rebel government said Ghanem, who was formerly head of the National Oil Company, persuaded Qadhafi’s son Saif al-Islam to let him leave the country to negotiate with western firms on behalf of the regime.

He is thought to have met at least two Western chief executives before turning himself in to Italian authorities.

Ghanem said he had not decided whether to join the rebels. But a source in the Transitional National Council (TNC) told Petroleum Economist Ghanem remained the “unacceptable face of the Libyan oil industry” and that the TNC would not welcome him.

“It’s a blow for Qadhafi, but we don’t like him,” said the source.

In a statement on 1 June, the TNC said Ghanem’s defection, alongside that of 120 military officers on 30 May, showed the regime had lost its legitimacy and had “no credibility and no future”.

It added: “The latest defection by Ghanem is welcomed by all of Libya and we urge others to be brave and follow his example. Ghanem has shown that it is possible to stand up against Qadhafi and that it is our duty as Libyans to unite and end Qadhafi’s brutal reign.”